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Mill Neck Manor Denies Overcharging Taxpayers

Mill Neck School for the Deaf officials  have denied allegations of overcharging taxpayers issued in a recent report from the New York State Comptroller’s Office.

“We disagree with many of the audit findings,” said William Charon, Mill Neck Manor’s chief financial officer, and emphasized that “there was no implication of illegal or fraudulent activity.”

“We are hoping to challenge the findings,” said Nancy Leghart, director of advancement for the school, in response to the report. She noted that a detailed response by the school to the comptroller’s office report is available online at the end of the audit report. http://www.osc.state.ny.us/audits/allaudits/093013/11s40.pdf

The report cites more than $280,000 in expenses, including extra salary and benefits for the school’s executive director, that the school claimed over a two-year period. The report finds that the school was not entitled to those expenses based on the State Education Department’s reimbursable cost manual.

State Comptroller Thomas DiNapoli, in a statement, contended that: “As we have seen in numerous audits, providers are taking advantage of lax oversight of the state’s special education programs.” He commented further that the State Education Department “needs to improve its oversight of these providers to ensure public monies are being spent properly.”

Specifically, the report alleged that Prowatzke received $338,361 in compensation for the two fiscal years ending June 30, 2010 but that only $214,712 of this amount should have been allocated to the Mill Neck School. The rest should have been charged to related entities that Prowatzke also oversees, according to the report.

They also found that the Mill Neck School billed the state education department  $7,688 for accrued vacation expenses which are not reimbursable until they are actually paid. 

Charon responded that “regarding Dr. Prowatzke, we documented to the auditors that we reimbursed New York State for 15 percent of his salary and benefits in recognition of the small amount of time he spends overseeing our Mill Neck Services for Deaf Adult organization, which has its own administration. We believe this allocation to be accurate and fair.”

Other expenses that the report disallowed include “$89,500 in inappropriate depreciation expenses, and the loan interest thereon, associated with certain major repairs,” which school officials did not submit repair proposals for preapproval.  Another $48,063 was cited as “not related to the program” or unsupported. 

In response, Charon said that “we provided two memos from the state education department saying that we did not need their approval provided the costs were within our approved budget. “

The report recommended that the education department should review the expenses cited in the audit and take appropriate action to recover the money from the school. 

 “We have already written to the education department and asked them to review our position in response to some of the major points of contention,” so that they might decide to reduce the amount of money disallowed.

    A further recommendation was that the school not charge costs to the education department that are not in compliance with the manual and that school officials explain manual requirements to staff.

In addition to disputing some of the findings, Leghart, director of advancement for the school, said that that the amount of money cited was a small  percentage, 1.6 percent, of the money that the school received from the education department.

“There were items that were incorrectly reported or allocated,” Charon commented. “Because we have three different corporations on our campus, we strive to properly allocate costs to the appropriate organization. Sometimes different methods of allocation can lead to differences of opinions as to how much expense is charged to each program.”

“We appreciate the work of the audit team to bring certain practices to our attention that can be improved, and have already begun steps to implement corrective measures,” Leghart said. “Nevertheless we take strong exception to any implication that public funds were used for any inappropriate purpose.”

Rather, she said “we continually strive to utilize our available funds in a responsible manner and to maximize the benefits for the children served by the school.”

Charon noted further: “We are audited twice each year by a leading accounting firm and have consistently received an unqualified opinion.”

 “We trust that the audit’s findings will not in any way diminish the fine reputation that we have developed over 60 years of providing the highest quality educational programs to the deaf children we serve,” Leghart said.